1 Dr. Kei Biu Chan Chairman, The Hong Kong Electronic Industries Association Chairman, The Hong Kong Green Manufacturing Alliance Chairman and Managing Director, Surface Mount Technology Ltd. September 15, 2005 Green Manufacturing – A Challenge and An Opportunity for Our Industry A Brief Introduction of Green Manufacturing and the Hong Kong Green Manufacturing Alliance HKEIA

2 Content Trend in Worldwide Electronics Industry What is “Green Manufacturing”? European Regulations on “Green” Advantages of “Green Manufacturing” Hong Kong’s Response to European Regulations HKEIA

3 World Electronics Industry Over US$ 1 trillion in annual production, one of the largest industries in manufacturing sector Average growth of 6-7% Products become smaller, thinner, lighter, faster, and less expensive More disposed products (shorter product life cycle) Problem of e-waste  threat to environment HKEIA

4 Rise of “Green Manufacturing” HKEIA Definition Manufacturer to exercise considerations for the environmental impact at all stages of the production process which includes resource saving, release of pollutants and recycling of components. The manufacturer will not introduce nor use any materials which may be harmful to the ecosystem in the design, production, field application and end of life disposal stages of any product.

5 What is “Green Manufacturing”? True meanings: Principle-fundamental Culture-for whole corporation Commitment -by every staff Responsibility-to society Long-term-evolving and never-ending HKEIA

6 Scope of Green Manufacturing Factory design and construction Daily operations Material and components Product design Production process End of life issue HKEIA

7 recyclable Remanufacture Obsolescence/Return Customer Use Manufacturing Packaging/Distribution Functional reliable low cost hazardous emission free reusable/recyclable consumables user safe energy efficient returnable reusable toxic free reusable recyclable manufacturability safe toxic free emissions free energy efficient returnable disassembly reuse remanufacture recycle Eco- Product Design Parts, Materials New Concept in Product Life-Cycle “Cradle to Cradle”

8 European Regulations on “Green” Energy-using Product (EuP) Directive: Applies to all energy consumption products “CE” label required Proof of compliance before product launch Embrace WEEE & RoHS concept HKEIA

9 European Regulations on “Green” Waste Electrical and Electronic Equipment (WEEE) Directive: Responsibility for collection, recovery and recycling of waste electrical and electronic equipment now rests with producers Target for recollection and recycling HKEIA

10 European Regulations on “Green” Restrictions of Hazardous Substances (RoHS) Directive: Set upper limit on six hazardous materials from use in manufacturing process HKEIA Restricted Substances By weight of homogeneous material Lead 0.1% Mercury 0.1% Cadmium 0.01% Hexavalent chromium 0.1% Brominated biphenyls (PBB) 0.1% Polybrominated diphenyl ethers (PBDE) 0.1%

11 EuP, WEEE and RoHS Timeline HKEIA Aug WEEE Directive effective 1 July RoHS Directive effective Aug Deadline for all member states to implement EuP * * EuP became law on 11 Aug, WEEE & RoHS became law on 13 Feb, 2003 Transposition

12 To comply with the laws, companies need to invest in: Waste control measures and systems Monitoring on materials and components suppliers New production process technologies and equipments, e.g. lead-free soldering Quality and reliability enhancement Testing of components Management practice ERP upgrade HKEIA Impact on Electronics Companies

13 Penalties for European Regulations Possible scenario for the penalty: Recall of all goods sold in the markets since the enforcement date for the law Fine on such goods Impounding of goods Banned from entering Europe HKEIA

14 Advantages of Practicing “Green Manufacturing” An entry barrier to competitors (knowledge, technologies, investment and management) Gain market share Higher quality products Long-term cost reduction through better process control, energy efficiency, and waste control Global companies will only partner with “green” suppliers and manufacturers Enhance company image Healthy and clean working environment HKEIA

15 Hong Kong’s Response to the European Directives

16 Why is Hong Kong Highly Concerned China is the factory of the world Southern China is the hub for electrical and electronic manufacturing – over 40% of GDP of Guangdong province HK companies operate more than 60,000 factories in Southern China Most products are either directly connected with electrical and electronics products or has high electronics content Not many factories are able to comply with the directives HKEIA

17 Establishment of the Hong Kong Green Manufacturing Alliance (HKGMA) A non profit making organization supported by manufacturing and trade associations Alliance officially formed on February 1, 2005 Chairman: Dr. KB Chan Secretariat: Federation of Hong Kong Industries Steering Committee – holds monthly meeting Government support HKEIA

18 Background of HKGMA Mission To facilitate the transformation of HK manufacturing industry into “Green” and enhance its competitive advantages Objectives To raise industry operators’ awareness of the requirement of green manufacturing, in particular those of the RoHS and WEEE Directives To provide industry operators with practical technical solutions for meeting the new requirement To implement a green assessment scheme to recognize those who manage to achieve certain standards HKEIA

19 Background of HKGMA Founding Members: Federation of Hong Kong Industries Hong Kong Electronics Industries Association Hong Kong Electrical Appliances Manufacturers Association Hong Kong Toys Council Hong Kong Watch and Clock Council Toy Manufacturers’ Association of Hong Kong Hong Kong Watch Manufacturers Associations HKEIA

20 Background of HKGMA HKEIA New Members: Hong Kong Critical Components Manufacturers Association Hong Kong Small and Medium Enterprises Association Federation of Hong Kong Machinery and Metal Industries –Hong Kong Metal Merchants Association –Hong Kong Metal Finishing Society –Hong Kong Plastic Merchants Association –Hong Kong Diecasting Association –Hong Kong Screw & Fastener Council –Hong Kong Auto Parts Industry Association –Hong Kong Metal Manufacturing Association –Hong Kong Electro-Plating Merchants Association –Hong Kong Foundry Association –Society of Automotive Engineer - HK

21 Background of HKGMA Advisors: Hong Kong Productivity Council Hong Kong Trade Development Council 6 universities in Hong Kong such as City University of Hong Kong and Hong Kong Polytechnic University Observer: Innovation and Technology Commission, Government of Hong Kong Special Administrative Region HKEIA

22 Activities of HKGMA HKEIA 1.Assist HK manufacturing industry –Hold regular seminars to promote awareness –Conduct workshops for technical and management skills –Organize factory visits –Guidance for compliance 2.Promotion –Worldwide campaign –Participate in international conference & exhibitions –Extend alliance to China and foreign countries

23 Activities of HKGMA HKEIA 3.Technological Advancement –Set up data centre and library –Co-ordinate R&D programs with local universities –Encourage design school to embrace Eco design –Advise Universities to include Green manufacturing in their curriculum –Monitoring of global development 4.Green Mark –Certification of consultants and test labs –Certification of companies –Establish green manufacturing practices and standards

24 Activities of HKGMA HKEIA 5. Others -As spokesman for Hong Kong industry on green issues -Liaise with and advise governments on relevant matters -Provide networking for industry

25 Start Green Manufacturing Now! HKEIA